Fashion's tastemakers feel the squeeze

By now, the trouble surrounding the big three luxury department stores, Neiman Marcus, Saks Fifth Avenue and Barneys New York, is old news. But what about the stores next door, those high-end independent boutiques that peddle Lanvin and Balenciaga on Main Street?

Specialty store owners are the tastemakers of their towns. Like fashion editors on a more intimate level, they introduce new talent, act as a conduit to designers, interpret trends and serve as personal shoppers for their clients. We saw firsthand how important this relationship can be with Chicago boutique owner Ikram Goldman, who is responsible for exposing First Lady Michelle Obama to such rising American design talents as Jason Wu and Thakoon Panichgul, and helping to mold her fashion image.

If it weren't for stores such as Maxfield, which stocked Giorgio Armani before anyone else in L.A., and Savannah in Santa Monica, which introduced Jil Sander to the market, those labels might not have been picked up by department stores and become the powerhouses they are today.

But as the economy continues to suffer, so does this crucial layer of the fashion hierarchy. In the past few months, we've seen several high-profile L.A. closures, including Tracey Ross and Presse.

With department stores taking unprecedented steps to get people shopping again, it's even harder for independent retailers to compete. Neiman Marcus, for instance, recently offered $500 gift certificates to people who brought in gently used suits for the charity Dress for Success.

Savannah's Susan Stone agrees. "Saks Fifth Avenue is a pariah in our business," she says. "What they have done is indicative of what's happened in the entire economy. There's this unfettered attempt at growth, and then you find yourself in a position where you have to dump merchandise."

Nancy Pearlstein's Washington, D.C., boutique Relish stocks Dries Van Noten, Marni, Jil Sander and other high-end lines. And as she sees it, "There is a war going on. Specialty stores resent designers for selling to department stores in areas close to them; designers resent department stores going on sale so quickly -- and then the specialty store gets ruined because of those sales. Everybody needs everybody else, but it's like a bad marriage. Instead of working together to make the customer come back, everybody is working against each other."

Buyers for specialty stores have been forced to come up with new and creative ways to survive. Almost all cut budgets by 20% to 40% going into the fall season. Some are taking clothes only on consignment, so they have to pay only for what sells. Others are negotiating looser payment schedules or working with designers to lower prices.

"Buys have to be cut back, we're trying to get extended payment terms, we're scratching and clawing," says Mark Goldstein, owner of eight boutiques in the L.A. area, including Madison Gallery in Malibu and Diavolina on Robertson Boulevard. "I don't think the prices are as low as they could be. High-end designers aren't discounting, they are giving you more time to pay. That's the extent of it."

Daskas has dropped several high-profile lines in favor of new discoveries. She's also listened to her customers, who "don't want things that are so serious. You have to tug on the heartstrings to get them to buy something."

L.A. boutique owner Desiree Kohan persuaded Hussein Chalayan to make the techno-fabric blouse he showed on the runway in silk poplin instead, cutting the price in half while still preserving the sculptural quality of the piece.

"For the past 14 months, where everyone was feeling the slowdown of the recession, we've increased our sales almost 30%," says Kohan, a designer and retailer whose Des Kohan store stocks Helmut Lang, J.C. Obando and Chalayan, as well as her own line.

She attributes her growth to having well-priced items in the store, such as $50 T-shirts and $500 dresses. "I won't import things and pay duties if it's not really worth it."

"Alber Elbaz went to the fabric mill to talk to them about the satin he uses so much," Daskas says. "He managed to cut prices at Lanvin by about 10%."

Still, she says, designers have not gone far enough.

"Last spring, we sold a $30,000 handbag," Daskas says. "But people don't want to pay $3,000 for a handbag now."

Adds Goldstein, "It's become the chic thing to say, 'I don't want to buy anything.' But it's creating a domino effect, and it's going to kill a lot of businesses."

Let's hope not. That would be a huge loss for L.A., and one more step toward cultural homogenization -- the very antithesis of fashion itself.